DOE modifies ‘petroleum contracting’ scheme

For prospective commercial discoveries, the Department of Energy (DOE) will be modifying the “upstream contracting round” for petroleum blocks at Philippine basins that could potentially yield fresh finds of indigenous oil and gas.

Essentially, the strategy will shift in a way that the prospective developers would already have the upper hand as to the target areas they will be setting their investment sights on, Manila Bulletin reported August 20.

“Any proponent could come up with a proposal that they want to explore a particular area. Then they will have to offer that to the DOE, but we will still have to publish it and offer it via competitive selection,” Cusi explained.

He emphasized that with this change in contracting methodology, the “waiting time” for the award of petroleum blocks could be lessened – compared to the era of the PECR wherein the DOE sets its own timeframe when it will undertake auctions for petroleum block offers.

To a certain extent, it will be some sort of “reversal of role” because the investor could now take that pace and risk assessment on its side. It still remains to be proven though if the contracting name change and track would also reverse the country’s destiny on dearth of commercial hydrocarbon discoveries.

“Before, investors would need to wait for DOE to make announcement that we will open this area for exploration. Now, any proponent can already come up with a study and submit it to the DOE,” Cusi said.

In turn, that could be the Department’s anchor also in undertaking bidding rounds on specific areas that could then be the pivot for seismic survey, exploration and prospectively commercial development.

While hammering out the specific processes of this revised contracting course, Cusi indicated that the government would now be ready to award the service areas for petroleum exploration won by relevant parties under PECR-5, so far ‘the last of the Mohicans’ under that petroleum contracting scheme.

It was the contractor’s tax issue on the royalty sharing arrangement that had impeded the process, he reiterated to media, but such has already been resolved paving the way for the signing of the contracts by President Rodrigo Duterte and these are now due for award to the winning investors.

After Malampaya for gas and Galoc for oil, the Philippines is lacking in new petroleum discoveries that could have pushed its energy independence to a higher degree.

The energy department has attempted offering new blocks for exploration and discovery, but these have been either hobbled by relentlessly challenged government policies, diplomatic strife in the West Philippine Sea, or reserve scarcity.

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